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Shell Signs Two New Contracts to Explore Offshore Sarawak

Apr 12, 2012

Shell Malaysia upstream operating company Sarawak Shell Berhad and partner PETRONAS Carigali Sdn Bhd today announced the signing of two new exploration and production sharing contracts (PSCs) with PETRONAS. The contracts represent new Malaysian acreage for the multinational.

Andrew Brown, Royal Dutch Shell’s Upstream International Director commented, ”Shell has been doing business in Malaysia for over 100 years and it remains a vital country central to Shell's long term global strategy. I am therefore delighted that we are still able to find new opportunities to explore and develop Malaysia’s excellent hydrocarbon resources, delivering value to the nation and energy with the world's growing needs.”

Shell’s minimum financial commitment for activities in the two blocks will be in the region of USD 145 million over the next four years. These new contracts underpin Shell’s commitment to Malaysia where the Company already invests an average of around USD 1 billion annually.

The PSCs are for blocks 2B and SK318, both offshore Sarawak. Under the agreements, Shell will undertake an aggressive drilling campaign to comprehensively explore an area totalling an estimated 9000 square kilometres in the two blocks over the respective exploration periods. The minimum work commitment includes acquisition of 3D seismic data, 5 electromagnetic surveys to acquire electromagnetic data and the drilling of 5 exploration wells in total. Shell is operator and has an 85% interest in both contracts with Carigali holding the remaining 15%.

Deepwater Block 2B is located some 300 kilometres offshore in water depths ranging from 300 to 2000 metres. The production sharing contract covers 35 years with an initial four year exploration phase. Block SK 318 is located about 200 kilometres offshore in water depths of between 200 to 1000 metres. The contract covers 27 years with a 3 year exploration period.

In executing their obligations under the PSCs, Shell will be employing new technologies such as Broadband 3D Seismic Data Acquisition, Advanced PSDM (pre-stack depth migration), advanced seismic interpretation software and tools.

The aggressive exploration program is expected to de-risk the challenging deepwater environment in the waters of North Luconia, especially with the employment of these new technologies.

Anuar Taib, Shell Malaysia chairman and managing director of Sarawak Shell Berhad commented, “We are pleased to continue to be a partner in Malaysia’s progress by helping to meet the country’s aspiration to sustain oil and gas production through intensifying our exploration activities. We thank PETRONAS for their continued confidence in us through the award of these blocks, and I look forward to using our global technology and expertise in a successful exploration campaign here.”

Shell has been operating in Malaysia since 1910, successfully venturing offshore Sarawak in the 1960s. Earlier in January this year, the company signed two new production sharing contracts to bring in enhanced oil recovery technologies to improve extraction rates in mature fields offshore Sarawak and Sabah.

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